Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 40-year veteran tax professional Robert D Flach.

Wednesday, January 31, 2018

2017 STATE TAX FORM UPDATE

All
state returns (that apply to me and my clients) are now finally up and
available at the appropriate state tax agency website.

The
2017 NJ-1040 form was finally made available at the NJDOT website forms page at
11:00 AM on Monday. As expected, there
was no change to the physical format or layout of the form, except for the
addition of Line 12c on Page 1 to indicate if the taxpayer and/or spouse or
civil union partner is eligible to the Veteran Exemption (although the word
exemption is misspelled “exeption”).

From
NJDOT – items that will be accepted to document a claim for the new Veteran
Exemption:

Just
a reminder – regardless of when you
submit your 2017 NJ-1040 to the state, refunds will not begin to be issued
until March 1st.

As
for the New York State resident (IT-201) and non-resident (IT-203) returns - the
only change to the physical format or layout of the forms appears to be the
addition of a Line 60o (IT-201) or 57o (IT-203) to add a new voluntary
contribution option for the Veterans’ Home Assistance Fund”, and the addition
of a line 79a (IT-201) and 69a (IT-203) to allow taxpayers to allocate via direct
deposit all or a portion of their refund to NYS Section 529 college savings
accounts via the new Form IT-195.

The
NYS standard deduction and tax rate schedules have been adjusted as per the
annual COLA. There have been a fee
changes and additions to obscure state credits, but nothing that would affect
any of my clients.

The "What's
New for 2017" section of the NY state income tax instruction booklets says
"A recent law change amended and
expanded the definition of NYS source income", but does not explain
just how. When I found out just what the
state is talking about I will post it here in a subsequent post.

The
biggest issue facing those who file New York State income tax returns going
forward – both residents and non-residents – involves the changes made
beginning in 2018 via the GOP Tax Act, specifically the “conformity” of the
state return to the federal return and a NYS requirement that taxpayers who
claim the federal Standard Deduction also claim the NYS Standard Deduction.

The
current NYS Standard Deduction for a single filer is $8,000, compared to the
$12,000 federal amount for 2018. And for
a married couple is it $16,050, compared to $24,000.

While
NYS does not allow a deduction for state and local income tax or sales tax, it
does permit a full deduction for real estate taxes, now limited to $10,000 on
the federal return. Many NJ residents
filing a NYS non-resident return and NYS residents pay more than $10,000 in
real estate taxes. And the loss of
Miscellaneous Expenses subject to the 2% of AGI exclusion reduces both federal,
and conforming NYS, itemized deductions.

It
has been suggested that if NYS continues to conform to the new federal rules
beginning in 2018 taxpayers who file NYS returns could see a $1.5 billion
increase in state tax.

New
York is not alone in having to fact this problem. If the 41 states with an income tax almost
all of them at least partially base taxable income on the federal return. New Jersey and Pennsylvania are exceptions –
they do not follow the federal return and have minimal allowable deductions.

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VERY IMPORTANT -

(1) Before contacting me with questions about how a blog post relates to your specific situation, please be aware that I do not give free tax advice to non-clients by e-mail, comment response, or phone. So don't waste your time and mine.

(2) I am winding down my tax practice, and I will not, under any circumstances, accept any new clients. Period. I am actually trying to "thin the herd".